Gujarat firms fail to catch up with Sensex in Q4

Notwithstanding an uncertain fourth quarter of the financial year 2011-12, it brought smiles to many Gujarat-based companies.

However, some companies were unable to make up for the losses incurred during the third quarter of the fiscal.

The stock market indices, Sensex and nifty rose 12.61% and 14.52% during the fourth quarter (Dec30, 2011 to March 30, 2012). But the growth of a few mid-capital to large capital companies of state have witnesses a decline or a growth in single digit, lesser than indices' growth.

Out of three state-owned companies, GACL and GSPL witnessed de-growth up to 6% during the quarter while GIPC remained almost flat. Zydus Group's Zydus Wellness too remained flat while Cadila Healthcare grew by 7.87%, still well below the growth of benchmark indices.

The biggest business group from the state, Adani Group, withstood the pressure of profit-booking and three listed entities of the group recovered from slide to grow marginally. The group has been in the eye of storm after CAG report indicted several PSUs and private sector companies for getting undue favours from Union coal ministry. After incurring huge losses in third quarter, Adani Power recovered and the scrip is up by 9.63% while Adani Enterprises and Adani Ports & SEZ grew by 3.59% and 7% respectively.

The last quarter has come as a boon to some state-based prominent companies too. Companies like Torrent Cables, Sintex Industries, AIA Engineering, Alembic Pharmaceuticals and Ganesh Housing Corporation have shown tremendous growth with rise of more than 30%. GSFC, Dishman Pharmaceuticals & Chemicals, Arvind Ltd and Torrent Pharmaceuticals too grew by 17% and more.

Small cap companies like Electrotherm Ltd, Pradip Overseas Ltd, Timbor Home and Riddhi Siddhi Gluco Biols have crashed by more than 20% in this period.

It is FIIs driven market and an uneventful Union Budget could not help the A group companies in capital markets, believes Jigar Patel, director, Parvati Shares & Stocks. "Usually, fourth quarter is always driven by FIIs, however, the A group shares either remained flat or have gone down. This quarter was listless despite Union Budget and global financial turmoil. Prices of commodities and currencies too remained flat. As a result, the market was driven by FIIs alone," Patel said. Echoing similar sentiments, Nilesh Kotak, MD & CEO of Dhanvarsha Fincap, said that favourites of FIIs have got good valuation during the quarter.

"FIIs are putting heavily in pharmaceutical, IT and FMCG sector. Because of this reason, the Alembic Pharmaceutical has seen a quantum leap," kotak said. However, Adani Group companies have not performed well in the quarter. "It seems FIIs have booked profit in all the three companies of Adani Group - Adani Enterprises, Adani Ports & SEZ and Adani Power have either remained flat or have fallen. In Zydus Wellness too, FII movement is negligible which has led the scrip southwards," Kotak said. In such a scenario, investors should start putting money in the scrips touching bottom, said director of Amrapali Group, Monal Thakkar. "As of now, gold is the best investment avenue but for long-term investors, scrips trading at the bottom levels may help in getting better returns. For next two to three months, the equity markets may remain bearish and after that the scrips may see rise," said Thakkar.